IndusInd Bank posted a consolidated net profit of Rs 2,124 crore for Q1 FY24, up 30 per cent YoY, led by steady growth in net interest income (NII) and lower slippages. Sequentially, the profit after tax was 4 per cent higher.
Consolidated earnings include the results for wholly-owned subsidiary Bharat Financial Inclusion and associate company IndusInd Marketing and Financial Services.
NII for the bank rose 18 per cent YoY to ₹4,867 crore. Net interest margin (NIM) for the quarter was at 4.29 per cent, up 8 bps on year and 1 bps on quarter, with MD and CEO Sumant Kathpalia guiding for NIM to stay in the 4.2–4.3 per cent band for FY24.
Advances grew 22 per cent YoY and 4 per cent QoQ to ₹3.0 lakh crore. The on-year increase was led by 21 per cent growth in vehicle loans, 22 per cent growth in corporate loans, 21 per cent growth in business banking loans, 39 per cent growth in credit cards, and 50 per cent growth in other retail loans.
In the earnings meet, Kathpalia said the bulk of the corporate growth was from the MSME and SME segments, which grew 10.4 per cent, whereas large corporates grew 3.5 per cent, wherein the bank is only lending to entities where it has a business banking relationship and the RoWA (return on weighted assets) can be maintained over 2 per cent.
The bank will also continue to ramp up its MFI book, with the aim of growing its share to 15 per cent of total loans from 11 per cent, depending on how different markets operate and the portfolio quality, he said, adding that the bank is diversifying its portfolio by way of merchant acquisitions and the addition of micro banking products such as scooter loans and home improvement loans.
It will also look to grow the home loan book from ₹650-675 crore to ₹15,000 crore over the next three years.
Slippages for the quarter were ₹1,376 crore, largely offset by loan recoveries, upgrades, and write-offs of ₹1,261 crore. Provision coverage ratio stood at 71 per cent.
Non performing assets
The gross NPA ratio of the bank was 1.94 per cent, better than 1.98 per cent in the previous quarter and 2.35 per cent in the previous year. The net NPA ratio, too, improved slightly to 0.58 per cent from 0.59 per cent a quarter ago and 0.67 per cent a year ago.
However, asset quality worsened for most consumer verticals on a sequential basis, with the gross NPA ratio for the consumer portfolio rising to 2.41 per cent from 2.37 per cent.
Slippages in vehicle finance were ₹581 crore against ₹383 crore in the previous quarter, Kathpalia said, adding that the bank, however, is well positioned in the market segment and has a loyal customer base given its 33-year track record.
He added that the slippages were due to seasonal factors, but overall credit costs will be around 1.0 per cent for FY24, within the bank’s range of 0.9–1.2 per cent.
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Deposits were up 15 per cent YoY and 3 per cent QoQ at ₹3.5 lakh crore as of June 30, with low-cost CASA deposits accounting for 40 per cent of total deposits.
The focus will remain on the granularisation of deposits, aided by the recent launch of the bank’s digital platform, and the aim of growing the share of CASA deposits to 43-45 per cent, he said.
On the board’s approval for promoter IndusInd International Holdings to increase its stake in the bank to 26 per cent from the current 15 per cent, Kathpalia said that the bank is well capitalised and not looking to raise any funds at the moment. It has not had any capital discussions with the board and will only look to raise capital if the CET-1 falls below 14 per cent.
The capital adequacy ratio of the bank was 18.4 per cent as of June 30, of which tier-1 capital was 16.4 per cent.